A recent article by Exploding topics showed something we all unfortunately know: 90% of start-ups fail, which is such a shame! All this hard work, energy, time, and money that go to waste, even though the original ideas can still have value.

The article also shows the main reason start-ups fail:

Work on your product-market fit!

The first one might come as a surprise. After all, you as an entrepreneur have a brilliant new idea that is either way better than what is out there or perhaps doesn’t even exist. However, this chart shows that even though your idea might be good, is it what the market needs? Apparently, there is a big mismatch, and it clearly shows that market research is necessary to increase your chance of success. The product-market fit analysis can be done upfront or with a mock-up/prototype, but you do need to talk to your potential customers. Understand what customers and prospects want, what their pain is and how can your product or solution solve this for them.

It is almost stating the obvious, but you need an excellent product-market fit with customers willing to pay.

Go-to-Market

The second-biggest reason for start-up failure is a wrong, poor, or sometimes no go-to-market strategy.
The basis for your go-to-market will be your business model: will you sell online via web shop and/or product-led growth, do you actively need to engage with customers to sell your product, will you work with (international) resellers? All these factors will determine your price and cost and how you go-to-market.

One might claim that this is later in the development cycle, let’s say once a prototype is ready. This is only partially true: yes, you might sell it yourself based on this, but how will you scale after that? If only you start to think about your business model when your product is ready you will either be too late or lose too much time and money.

As part of this, you need to think about marketing and sales. Your (unknown) product will not sell itself and word-of-mouth, if that happens at all, takes time. You therefore actively need to market your product. This will include amongst other things (online)campaigns, trade shows, etc. Your website needs to be modern, engaging and very clear about what you have to offer and how it helps your customers tp solve their problems. In short: work on your branding.

Once you have prospects, you need to follow them up swiftly and try to close your first deals. Beware that in case of groundbreaking products or complex solutions, this will take time and impact your cash flow. A strict sales process is key therefore and with that you can build up experience and fine-tune, which in return will give you a good basis to grow when you hire additional staff.

A good go-to-market strategy also includes service and after sales: successful and happy customers are key in every phase, and even more in the beginning: you do need good references for next sales and in case you sell a SaaS solution, this will keep your churn to a minimum. That's why you should also think about your customer success staff. Whether this is through implementation, onboarding and/or support; have a strategy in place.

TEam

With a lot of start-ups, and certainly for tech start-ups, the focus is on the product or solution and the team often consists dominantly of “techies”. It is clear that this staff is important because otherwise no product! However, to have no sales or marketing staff in the team will be a reason why start-ups fail. The points mentioned above do not happen overnight and cannot be solved as a side job for somebody on the team: these are crucial and full-time jobs. It is key that this is solved one way or another and also these FTE need to be part of your go-to-market.

Bamboo Ventures

As Bamboo ventures we invest in tech start-ups, with a focus on industry or logistics. We do this through our proven PreXLR and XLR go-to-market programs that have been implemented for more than 200 companies. We help start-ups overcome the two biggest reasons of failure and increase the chance for success!
We work with you on these topics: we are not consultants or trainers, but also pick up the phone to call. We actively help you build your business!

You don’t pay us for these programs, but in return we ask you for a small stake in your company – we are therefore only successful if you are successful!

Interested?

Reach out and let's talk